- Gold markets have fallen rather hard during the trading session on Thursday, as the CPI numbers have come out much hotter than anticipated.
- The reading of 0.4% month over month with much stronger than 0.2%, and therefore the market started buying US dollars in pricing in a major move in the interest rate markets.
- We have turned around to show signs of life again, so now I think not much was settled.
It is a nice-looking hammer that we are forming, and that will have a lot of short-term traders interested. Having said that, it’s very likely that the market will bounce a bit in the short term. I think that should end up being a selling opportunity given enough time. I think it’ll be interesting to see how the market closes out for the weekend, because it will give you an idea as to what people are willing to hold. Gold markets continue to look at the $1680 level as an area of interest, and the 50-Day EMA sits just above the $1700 level and is falling. After that, we have a significant downtrend line that’s worth paying attention to, so it all comes together for a potential selling opportunity on the first signs of exhaustion.
Market Likely to Remain Noisy
Alternatively, we could break down below the bottom of the candlestick for this session, which would be a very negative turn of events as we continue to see sellers even though we had a nice short-term bounce. The market will remain very noisy to say the least, I think that something that you must get used to. Gold markets are highly sensitive to the US dollar, but also interest rates in general. If interest rates start to spike again, that will cause some issues and therefore could put downward pressure on the gold market.
This is a situation where the market continues to see a lot of downward pressure, but if we do break above the $1750 level, then you can start to have the conversation about gold recovering. I think we need to see the Federal Reserve turn its entire attitude around as well to make that happen. I think more likely than not we are going to try to carve out some type of trading range, followed by further selling.
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